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Pinnacle Foods Maintains 2016 View, to Provide 2017 Outlook
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Pinnacle Foods, Inc. recently reaffirmed its 2016 earnings guidance and announced that it will provide an initial outlook for 2017 earnings on Dec 15. The food company will also discuss 2016 performance on the said date.
Pinnacle Foods continues to expect 2016 adjusted earnings in the range of $2.13 to $2.15 per share, as announced during the third-quarter 2016 conference call. The earnings outlook represents year-over-year growth of 11%−12%. The Boulder Brands acquisition (completed in January) is expected to contribute approximately 8−9 cents to adjusted earnings per share for the year. Boulder Brands is expected to contribute net sales in a range of $460−$480 million.
The company reported strong third-quarter 2016 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. Earnings of 53 cents per share grew 15.2% from the year-ago quarter led by double-digit sales growth, improved gross profit and favorable productivity mix. Sales increased 19.3% year over year driven by the Boulder Brands acquisition, higher pricing and increased volume. Gross margin also expanded backed by improved productivity, the Boulder Brands acquisition and favorable product mix, offsetting the impact of input cost inflation. Estimates have largely remained unchanged since Pinnacle Foods' third-quarter 2016 earnings release.
With a motive to expand its distribution network and customer base and persistent focus on innovation and strategic acquisitions backed by a strong portfolio of brands, Pinnacle Foods remains confident of boosting its long-term growth.
Also, Pinnacle Foods has exhibited a bullish run on the index year to date. We note that in the said period the stock increased 18.8% and outperformed the Zacks categorized Food-Miscellaneous/Diversified Market industry, which showcased growth of just 5.1%.
A leading manufacturer, marketer and distributor of branded food products, Pinnacle Foods actively manages its diverse portfolio of iconic food brands and regularly innovates in order to further differentiate its brands in the marketplace. Moreover, Pinnacle Foods has an operational excellence program to generate annual productivity savings across the supply chain. These productivity savings, along with higher pricing, have been mitigating the impact of input cost inflation to drive gross margins.
The company also indulges in strategic acquisitions to further expand its footprint. The acquisition of Boulder Brands has given Pinnacle a new growth platform for refrigerated foods. The company is expected to realize benefits of scale in areas such as procurement, manufacturing, and logistics. The deal will also eliminate duplicative costs and will generate cost savings opportunities. The benefits from the acquisition are expected to be spread over 2016 and 2017.
Hurdles
Despite the growth strategies, Pinnacle Foods remains apprehensive of incurring higher introductory costs related to product innovation. Moreover, increased consumer marketing investment and currency headwinds are likely to hurt profits.
The company has been witnessing sluggish net sales and adjusted EBIT for the Specialty Foods segment since the past two quarters, despite solid growth in the Snacks business, due to a heightened competitive bidding environment for the already low-margin USDA stew business.
Nonetheless, the stock has a long-term earnings growth rate of 7.7% and a beta of 0.29, which makes it attractive. Given the pros and cons, Pinnacle Foods currently has a Zacks Rank #3 (Hold).
Mondelez International has an expected earnings growth rate of 13.12%. Further, it has delivered positive earnings surprises in three out of the trailing four quarters, leading to an average earnings surprise of 11.20%.
While Lancaster Colony has an expected earnings growth rate of 3.00%, Sysco has an expected earnings growth rate of 8.83%.
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Pinnacle Foods Maintains 2016 View, to Provide 2017 Outlook
Pinnacle Foods, Inc. recently reaffirmed its 2016 earnings guidance and announced that it will provide an initial outlook for 2017 earnings on Dec 15. The food company will also discuss 2016 performance on the said date.
Pinnacle Foods continues to expect 2016 adjusted earnings in the range of $2.13 to $2.15 per share, as announced during the third-quarter 2016 conference call. The earnings outlook represents year-over-year growth of 11%−12%. The Boulder Brands acquisition (completed in January) is expected to contribute approximately 8−9 cents to adjusted earnings per share for the year. Boulder Brands is expected to contribute net sales in a range of $460−$480 million.
The company reported strong third-quarter 2016 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. Earnings of 53 cents per share grew 15.2% from the year-ago quarter led by double-digit sales growth, improved gross profit and favorable productivity mix. Sales increased 19.3% year over year driven by the Boulder Brands acquisition, higher pricing and increased volume. Gross margin also expanded backed by improved productivity, the Boulder Brands acquisition and favorable product mix, offsetting the impact of input cost inflation. Estimates have largely remained unchanged since Pinnacle Foods' third-quarter 2016 earnings release.
PINNACLE FOODS Price and Consensus
PINNACLE FOODS Price and Consensus | PINNACLE FOODS Quote
Driving Factors
With a motive to expand its distribution network and customer base and persistent focus on innovation and strategic acquisitions backed by a strong portfolio of brands, Pinnacle Foods remains confident of boosting its long-term growth.
Also, Pinnacle Foods has exhibited a bullish run on the index year to date. We note that in the said period the stock increased 18.8% and outperformed the Zacks categorized Food-Miscellaneous/Diversified Market industry, which showcased growth of just 5.1%.
A leading manufacturer, marketer and distributor of branded food products, Pinnacle Foods actively manages its diverse portfolio of iconic food brands and regularly innovates in order to further differentiate its brands in the marketplace. Moreover, Pinnacle Foods has an operational excellence program to generate annual productivity savings across the supply chain. These productivity savings, along with higher pricing, have been mitigating the impact of input cost inflation to drive gross margins.
The company also indulges in strategic acquisitions to further expand its footprint. The acquisition of Boulder Brands has given Pinnacle a new growth platform for refrigerated foods. The company is expected to realize benefits of scale in areas such as procurement, manufacturing, and logistics. The deal will also eliminate duplicative costs and will generate cost savings opportunities. The benefits from the acquisition are expected to be spread over 2016 and 2017.
Hurdles
Despite the growth strategies, Pinnacle Foods remains apprehensive of incurring higher introductory costs related to product innovation. Moreover, increased consumer marketing investment and currency headwinds are likely to hurt profits.
The company has been witnessing sluggish net sales and adjusted EBIT for the Specialty Foods segment since the past two quarters, despite solid growth in the Snacks business, due to a heightened competitive bidding environment for the already low-margin USDA stew business.
Nonetheless, the stock has a long-term earnings growth rate of 7.7% and a beta of 0.29, which makes it attractive. Given the pros and cons, Pinnacle Foods currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the broader consumer staples sector include Mondelez International, Inc. (MDLZ - Free Report) , Lancaster Colony Corporation (LANC - Free Report) and Sysco Corporation (SYY - Free Report) . All of them carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Mondelez International has an expected earnings growth rate of 13.12%. Further, it has delivered positive earnings surprises in three out of the trailing four quarters, leading to an average earnings surprise of 11.20%.
While Lancaster Colony has an expected earnings growth rate of 3.00%, Sysco has an expected earnings growth rate of 8.83%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>